RFC: Cloud Computing Resource Exchange (CCRE)

A Decentralized Marketplace for Cloud Infrastructure
Authors: Prajna Prayas
Date: 27 January 2025

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1. Abstract

This document proposes a standardized exchange mechanism for cloud computing resources, drawing parallels to electricity markets while addressing unique computational constraints. The system combines:

• Commoditized IaaS abstraction layer
• Continuous double-auction market mechanism
• Cross-cloud API standardization
• Risk-managed settlement system

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2. Introduction

2.1 Historical Context

"Computing may someday be organized as a public utility" - John McCarthy (1961)
The vision of computing-as-utility has evolved through:

• Time-sharing systems (1960s)
• Grid computing (1990s)
• Cloud computing (2000s)
• Serverless architectures (2010s)

2.2 Modern Opportunity

Current cloud market inefficiencies:

Issue	Current State	CCRE Solution
Price Discovery	Opaque pricing	Transparent markets
Resource Mobility	Vendor lock-in	Standardized APIs
Utilization	Average 40% server utilization	Dynamic allocation

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3. Architectural Overview

sequenceDiagram
    participant User as Consumer
    participant Exchange as Cloud Exchange
    participant ProviderA as Hetzner
    participant ProviderB as AWS
    
    User->>Exchange: Bid(100 vCPUs, $0.05/hr)
    Exchange->>ProviderA: Price Query
    Exchange->>ProviderB: Price Query
    ProviderA-->>Exchange: Offer $0.06
    ProviderB-->>Exchange: Offer $0.055
    Exchange->>User: Match @ $0.055
    User->>ProviderB: Deploy workload
    ProviderB->>Exchange: Usage telemetry
    Exchange->>User: Bill
    Exchange->>ProviderB: Settle payment

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4. Market Mechanism Design

4.1 Auction Types

Spot Market:

• Continuous double auction
• 30-second price intervals
• Preemption allowed

Forward Market:

• Day-ahead commitment
• Financial transmission rights

4.2 Matching Algorithm

flowchart LR
    Order --> MatchingEngine
    MatchingEngine --> |Price-Time Priority| OrderBook
    OrderBook --> |FOK/IOC| TradeExecution
    TradeExecution --> Settlement

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4.3 Pricing Model

Hybrid approach combining:

• VCG Mechanism (Truthfulness)
• Mid-Price Spread (Liquidity)
• ARIMA Forecasting (Price signals)

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5. Cross-Cloud Standardization

5.1 API Taxonomy

Layer	Standard	Example
Authentication	OAuth2.0	Unified token
Compute	CIMI Lite	Instance object
Storage	CDMI Lite	Bucket interface
Network	NaaS 1.0	Virtual router

5.2 Compatibility Matrix

Feature	AWS	Hetzner	GCP
vCPU Unit	1:1	1:0.95	1:1.1
RAM Pricing	$0.05/GB	$0.04/GB	$0.055/GB
Storage SLA	99.99%	99.95%	99.99%

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6. Risk Management Framework

6.1 Key Components

• Margin Calculator: $$Initial Margin = σ(Price) × √(HoldingPeriod) × Quantile(99%)$$
• Circuit Breakers:

  if price_change > 15% in 5min:
      halt_trading(300sec)

• SLA Insurance Pool:
  Crowdfunded downtime protection

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7. Implementation Roadmap

Phase 1 (Q1-Q2 2024):

• Core matching engine (Go)
• Hetzner/AWS adapters
• Basic spot market

Phase 2 (Q3 2024):

• FaaS layer standardization
• Forward market contracts
• Cross-cloud migration

Phase 3 (2025):

• AI-powered arbitrage bots
• Quantum-resistant settlement
• Edge computing integration

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8. Academic Foundations

8.1 Key Papers

1. Market Design:

   • "The Theory of Auctions" (Milgrom, 1981)
   • "Combinatorial Auctions" (Cramton, 2006)

2. Cloud Economics:

   • "A Market-Oriented Grid" (Buyya, 2002)
   • "Intercloud Architecture" (Bernstein, 2010)

3. Risk Management:

   • "Value at Risk" (Jorion, 1996)
   • "HFT Risk Controls" (Aldridge, 2013)

8.2 Historical Precedents

• California Power Exchange (1998-2001)
• AWS Spot Market (2009-Present)
• Alibaba Cloud Spot (2016-Present)

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9. Stakeholder Impact Analysis

Group	Benefit	Risk
Cloud Providers	Increased utilization	Price competition
Enterprises	Cost optimization	Operational complexity
Regulators	Market transparency	Systemic risk
Developers	Portable workloads	Learning curve

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10. Conclusion & Next Steps

This RFC proposes a radical rethinking of cloud infrastructure markets through:

1. Financial market-inspired trading mechanisms
2. Strong API standardization efforts
3. Hybrid centralized/decentralized governance

Immediate Actions:

1. Form technical steering committee
2. Develop MVP with Hetzner integration
3. Establish academic partnerships

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Appendices

A. Glossary
B. Reference Implementation
C. Regulatory Considerations
D. Security Audit Plan